NEW YORK – Stocks are opening sharply higher on Wall Street Tuesday as hopes build that Congress will agree on a big coronavirus relief bill. That would follow more aggressive steps from the Federal Reserve annouunced a day earlier to support lending and bond markets. Major U.S. indexes jumped more than 5% in the first few minutes of trading, and European and Asian markets also surged. The lurch higher was the latest dizzying move for markets, which are still down by more than a third from their record highs reached a month ago as the economic damage from the coronavirus becomes more and more severe.
THIS IS A BREAKING NEWS UPDATE. AP’s earlier story is below:
Global stocks surged Tuesday while U.S. futures raced ahead so much that trading had to be halted, after U.S. political leaders said they were nearing a deal on a massive government stimulus package to offset the damage inflicted by the coronavirus pandemic.
Stock markets around the world, from Japan's Nikkei to Germany's DAX, have spiked by more than 5%. Wall Street was also headed for similar gains at the bell, which according to regulations means that trading is suspended temporarily. Despite the gains, most indexes are down around a third from where they started the year.
In the U.S., sentiment appears to have been boosted after top congressional and White House officials emerged from grueling negotiations over a nearly $2 trillion coronavirus rescue package saying they expected to reach a deal Tuesday. That aid would come on top of the Fed's announcement Monday that it would buy as many Treasurys and other assets as needed, including corporate bonds for the first time, to keep financial markets functioning.
Governments and central banks in other countries around the world are also unveiling unprecedented levels of support for their economies in an attempt to limit the scale of the upcoming virus-related slump. Germany, a bastion of budgetary discipline, is also mulling a big fiscal boost.
A raft of economic surveys released Tuesday, including from Japan and Europe, provided clear evidence of the scale of the recession the world is in as many countries around the world impose draconian lockdown restrictions on economic activity, the latest being Britain.
“Everyone was prepared for a set of shockers, and that is precisely what we got, but they are not a surprise,” said Chris Beauchamp, chief market analyst at IG. “It is at times like this that the market’s propensity to look forward is demonstrated most effectively.”
A further boost to sentiment has come from the news that China is preparing to lift the lockdown in Wuhan, the epicenter of the outbreak, and from Italy reporting a reduction in the number of new cases and coronavirus-related deaths.
“It's still early days, of course — perhaps investors can start to envisage life beyond the coronavirus,” said Craig Erlam, senior market analyst at OANDA Europe. “That could make stocks look a little more attractive, although anyone jumping back in now will need to have nerves of steel.”
In Europe, Germany's DAX was up 6.6% at 9,321 while the FTSE 100 index of leading British shares spiked 4.2% at 5,202. France's CAC-40 soared 5.7% to 4,139.
Before the trading suspension in the U.S., Dow futures and the broader S&P futures were up by the maximum 5%.
Earlier in Asia, Tokyo's Nikkei 225 rose 7.1% to 18,092.35 and the Kospi in Seoul surged 8.6% to 1,609.97. The Shanghai Composite Index was 2.3% higher at 2,722.44 and Hong Kong's Hang Seng gained 4.5% to 22,663.49.Australia's S&P-ASX 200 gained 4.2% to 4,735.70 and India's Sensex added 3.1% to 26,776.71. New Zealand rose 7.2% and Singapore added 5.3%.
Whether the gains can be built on in coming days will likely hinge on how the effectiveness of the measures taken by governments to get on top of the outbreak. The number of known infections worldwide jumped past 380,000. After just a few weeks, the United States has more than 46,000 cases and more than 600 deaths.
For most people, the coronavirus causes only mild or moderate symptoms, such as fever and cough. Those with mild illness recover in about two weeks. Severe illness including pneumonia can occur, especially in the elderly and people with existing health problems. Recovery could take six weeks in such cases.
In energy markets, benchmark U.S. crude rose $1.40 to $24.76 per barrel in electronic trading on the New York Mercantile Exchange, while Brent crude, used to price international oils, added $1.17 to $28,20 per barrel in London.
In the currency markets, the euro was up 1.5% at $1.0876 while the dollar fell 0.7% at 110.45 yen.